Expert says post-fiscal cliff taxes aren't as bad as they could've been

Reported by: Ashley Cullins
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Updated: 1/16/2013 12:02 am
RENO, Nev. (KRNV & MyNews4.com) -- The biggest effects of the fiscal cliff legislation are the ones we won't see because they didn't happen. Taxpayers with incomes above $400,000 will see some significant changes, but most of us dodged a financial bullet.

"Everything would've been the same through 2012, but then, guess what, we fall off the cliff," said John Solari, certified public accountant and managing partner of J.A. Solari and Partners.

Solari says the American Taxpayer Relief Act of 2012 prevented that fall in most cases.

"The middle-class tax payers that we hear so much about, their tax rates are effectively the same," Solari said. "The one thing they will see: their social security tax went up by 2 percent."

While that can add up, it's not as bad as the 3 to 5 percent increase we could have seen.

But households with more than $450,000 in income will see a jump.

"Those rates went up to 39.6 percent," Solari said. "They were 35 percent."

But overall Solari says it's a much better deal. 

"It's keeping more money in the economy and hopefully consumers will spend some of that money, they'll keep businesses going," Solari said. "There's a stimulus out there for companies to go buy equipment."

From vehicles to machinery to technology, businesses can deduct equipment purchases up to a certain amount.

"It was $500,000. Now it's $600,000," Solari said. "It could have been zero."

So businesses avoided a big hit, and so did people with estates between one and five million dollars - who could've had to pay taxes on 55 percent of the value.

"There's a lot of people out there who, if those laws would've changed, they would've had taxable estates and they wouldn't even know it," Solari said.

Estate taxes did increase from 35 to 40 percent, but instead of dropping to one million the line stays at five.

When you can file your income taxes is changing too. Now most people can file on or after January 30, but if you file certain forms like residential energy or business credits you'll have to wait until late February or March. For a full list of income tax forms that will be delayed, click here.
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